Correlation Between IShares Core and Ninepoint Bitcoin

Can any of the company-specific risk be diversified away by investing in both IShares Core and Ninepoint Bitcoin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Core and Ninepoint Bitcoin into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core SP and Ninepoint Bitcoin ETF, you can compare the effects of market volatilities on IShares Core and Ninepoint Bitcoin and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Core with a short position of Ninepoint Bitcoin. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Ninepoint Bitcoin.

Diversification Opportunities for IShares Core and Ninepoint Bitcoin

0.8

Correlation Coefficient

IShares Core  Ninepoint Bitcoin

Very poor diversification

The 3 months correlation between IShares and Ninepoint is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Ninepoint Bitcoin ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ninepoint Bitcoin ETF and IShares Core is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Core SP are associated (or correlated) with Ninepoint Bitcoin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ninepoint Bitcoin ETF has no effect on the direction of IShares Core i.e., IShares Core and Ninepoint Bitcoin go up and down completely randomly.

Pair Corralation between IShares Core and Ninepoint Bitcoin

Assuming the 90 days trading horizon iShares Core SP is expected to generate 0.34 times more return on investment than Ninepoint Bitcoin. However, iShares Core SP is 2.93 times less risky than Ninepoint Bitcoin. It trades about -0.07 of its potential returns per unit of risk. Ninepoint Bitcoin ETF is currently generating about -0.12 per unit of risk. If you would invest  6,194  in iShares Core SP on December 27, 2024 and sell it today you would lose (279.00) from holding iShares Core SP or give up 4.5% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

iShares Core SP  vs.  Ninepoint Bitcoin ETF

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, IShares Core is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ninepoint Bitcoin ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ninepoint Bitcoin ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Pair Trading with IShares Core and Ninepoint Bitcoin

The main advantage of trading using opposite IShares Core and Ninepoint Bitcoin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Ninepoint Bitcoin can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ninepoint Bitcoin will offset losses from the drop in Ninepoint Bitcoin's long position.

The idea behind iShares Core SP and Ninepoint Bitcoin ETF pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.